Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1760 OF 2023
(@ SPECIAL LEAVE PETITION (C) NO. 4006 OF 2021)
ICON EDUCATION SOCIETY ..... Appellant
Vs.
STATE OF MADHYA PRADESH & OTHERS ..... Respondents
J U D G M E N T
SANJAY KUMAR, J.
Leave granted.
2 . The short question that arises for consideration in this case
is whether a minority educational institution in the State of
Madhya Pradesh is required to get the fees charged by it fixed by
the Admission and Fee Regulatory Committee under the provisions of
the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka
Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (for short,
Signature Not Verified
'the Act of 2007')?
Digitally signed by
ARJUN BISHT
Date: 2023.03.17
15:28:10 IST
Reason:
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3 . This issue is no longer res integra as the contours and import
of the Act of 2007, including the question aforestated, were dealt
with and decided by a Constitution Bench in Modern Dental College
and Research Centre and others Vs. State of Madhya Pradesh and
others [(2016) 7 SCC 353] . However, failure of the parties in
properly understanding the ratio decidendi of the above decision
led to the present litigation.
4 . Icon Education Society, the appellant herein, maintains and
manages two unaided educational institutions at Indore, viz.,
Indore Institute of Law and Indore Nursing College. Both these
institutions qualify as ‘minority educational institutions’ under
Section 2(g) of the National Commission for Minority Educational
Institutions Act, 2004. While so, by letter dated 08.07.2019, the
Admission and Fee Regulatory Committee (for short, ‘the AFRC’),
constituted under Section 4 of the Act of 2007, called upon the
Indore Institute of Law to submit its proposal for regulation of
the fees pertaining to law courses offered by it. This was
followed up by a reminder on 24.07.2019, which was addressed to
all private law colleges in the State of Madhya Pradesh. The
appellant society addressed reply dated 31.07.2019, stating that
the AFRC was not empowered to regulate the fees charged by
minority educational institutions and requesting that the notices
issued may be withdrawn or cancelled. The AFRC responded, vide
letter dated 14.11.2019, stating that a decision had been taken in
the meeting held on 08.11.2019 that the fees of minority
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institutions should be fixed by the AFRC. The appellant society
was accordingly informed that its request for relaxation from
getting the fees fixed by the AFRC was rejected.
5 . Aggrieved thereby, the appellant society preferred an appeal
under Section 10 of the Act of 2007 before the designated
authority. The appeal was dismissed by the appellate authority, by
order dated 10.01.2020, holding that the procedure of
regulating/fixing of fee was common to both minority and non-
minority institutions. The review/recall petition preferred by the
appellant society was dismissed with costs by the appellate
authority on 06.03.2020.
6 . Thereupon, the appellant society filed WP No. 9690 of 2020
before the Indore Bench of the Madhya Pradesh High Court. Its
prayer therein was to declare Sections 4 and 9 of the Act of 2007
ultra vires as these provisions did not distinguish between
minority educational institutions and other educational
institutions and, in consequence, did not exempt minority
educational institutions from fee-fixation. A further direction
was sought to exempt the appellant society, being a minority
educational institution, from the application of Section 9 of the
Act of 2007, thereby permitting it to fix its own fees.
7 . By order dated 19.11.2020, a Division Bench of the Madhya
Pradesh High Court at Indore dismissed the writ petition. The
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Division Bench noted that the validity of the Act of 2007 had
already been upheld in Modern Dental College and Research Centre
( supra ) . The High Court then relied upon Sk. Md. Rafique Vs.
Managing Committee, Contai Rahamania High Madrasah and others
[(2020) 1 SCT 627(SC)] , wherein this Court referred to its earlier
edict in Ahmedabad Saint Xaviers College Society and another Vs.
State of Gujarat and another [(1974) 1 SCC 717] that the right
under Article 30(1) of the Constitution is not absolute or above
other provisions of law and the essence of Article 30(1) was to
ensure equal treatment between majority and minority institutions.
It was further held that the laws of the land, including rules and
regulations, must apply equally to majority institutions as well
as minority institutions. In his concurring opinion, H.R.Khanna J
had held that a balance must be kept between the two objectives –
one, to ensure the standard of excellence of the institution and
the other, preserving the right of minorities to establish and
administer educational institutions. In the light of Modern Dental
College and Research Centre (supra) and Sk. Md. Rafique (supra) ,
the High Court concluded that no grounds were made out to
interfere with the orders passed by the AFRC.
8 . Heard Mr.Dama Seshadri Naidu, learned senior counsel,
appearing for the appellant society; and Mr.P.V.Yogeshwaran,
learned AAG, appearing for the State of Madhya Pradesh.
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9 . Section 4 in Chapter 2 of the Act of 2007 deals with the
constitution and establishment of the AFRC. Section 4(1) provides
that the State Government shall, by notification in the official
gazette, constitute a committee to be called the ‘Admission and
Fee Regulatory Committee’, for the supervision and guidance of the
admission process and for the fixation of fees to be charged from
candidates seeking admission in a private professional educational
institution. Section 4(8) provides that the AFRC may require a
private aided or unaided professional educational institution or a
deemed university to furnish, by the prescribed date, information
as may be necessary for enabling the AFRC to determine the fees
that may be charged by the institution in respect of each
professional course and the fees so determined shall be valid for
such period as may be notified by the State Government.
10. Chapter 4 of the Act of 2007 deals with fixation of fees.
Section 9(1) therein provides that, having regard to the location
of the private unaided professional educational institution; the
nature of the professional course; the cost of the land and
building; the available infrastructure, teaching, non-teaching
staff and equipment; the expenditure on administration and
maintenance; the reasonable surplus required for growth and
development of the professional institution; and any other
relevant factor, the AFRC shall determine, in the manner
prescribed, the fees to be charged by the private unaided
professional educational institution. Section 9(2) provides that
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the AFRC shall give the institution an opportunity of being heard
before fixing any fees. The proviso thereunder states that no such
fees, as may be fixed by the AFRC, shall amount to profiteering or
commercialization of education.
11 . Significantly, in the 11-Judges Bench decision of this Court
in T.M.A. Pai Foundation and others Vs. State of Karnataka and
others [(2002) 8 SCC 481] , the majority opinion voiced by
B.N.Kirpal CJ, speaking for himself and five other learned Judges,
answered the question as to whether statutory provisions
regulating facets of administration of educational agencies,
including regulation of fees, would interfere with the right of
administration by minorities in the negative, but held that such
regulatory measures should be minimal in the case of unaided
minority educational institutions. As regards the fees to be
charged by unaided institutions, it was held that the same could
not be regulated but no institution should charge capitation fee.
It was emphasized that, inasmuch as the occupation of education
is, in a sense, regarded as charitable, the Government can provide
regulations that will ensure excellence in education, while
forbidding the charging of capitation fee and profiteering by the
institution. Since the object of setting up an educational
institution is by definition "charitable", it was held to be clear
that an educational institution cannot charge such a fee as is not
required for the purpose of fulfilling that object. To put it
differently, per the majority, in the establishment of an
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educational institution, the object should not be to make a profit
inasmuch as education is essentially charitable in nature, but
there could, however, be a reasonable revenue surplus, which may
be generated by the educational institution for the purpose of
development of education and expansion of the institution. The
partly-concurring opinion of S.N.Variava J, speaking for himself
and Ashok Bhan J, was to the effect that there could be an
appropriate mechanism to ensure that no capitation fee is charged
and profiteering is not resorted to, but the extent of regulation
would not be the same for aided and unaided institutions.
12 . Thereafter, in the 7-Judges Bench decision of this Court in
P.A. Inamdar and others Vs. State of Maharashtra and others
[(2005) 6 SCC 537] , this Court unanimously held that, as per the
law declared in T.M.A. Pai Foundation ( supra ) , setting up a
reasonable fee structure is also a component of the right to
establish and administer an institution, within the meaning of
Article 30(1) of the Constitution, and every institution is free
to devise its own fee structure subject to the limitation that
there can be no profiteering and no capitation fee can be charged
directly or indirectly or in any form. It was further held that it
is permissible to regulate admission and fee structure for
achieving that purpose. The question whether guidelines could have
been issued in the matter of regulating the fee payable by
students to educational institutions was, therefore, answered in
the affirmative by holding that every institution is free to
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devise its own fee structure but the same can be regulated in the
interest of preventing profiteering and capitation fees.
13 . As stated hereinbefore, the Act of 2007 fell for consideration
before a Constitution Bench in Modern Dental College and Research
Centre (supra) in the context of regulation of unaided educational
institutions in the State of Madhya Pradesh. Significantly, the
validity/vires of various provisions of the Act of 2007, including
provisions pertaining to fixation of fees, was also under attack.
The issue was as to whether provisions relating to fixation of
fees were violative of Article 19(1)(g) or whether they were
regulatory in nature and were permissible under Article 19(6) of
the Constitution. K eeping in mind the fact that the State has the
power to regulate fixation of fees in the interest of preventing
profiteering and such fixation of fees has to be regulated and
controlled at the initial stage itself, this Court observed that
the parameters laid down in Section 9(1) of the Act of 2007, which
have to be kept in mind while fixing the fees were, in fact, the
ones enunciated in earlier judgments of this Court. This Court,
therefore, held that analysis of the provisions of the Act of 2007
by the Madhya Pradesh High Court in Association of Private Dental
and Medical Colleges Vs. State of MP [(2009) SCC Online MP 760] ,
from which the appeal arose, was perfectly in order. Reference was
made to the observations contained therein to the effect that each
professional educational institution can furnish information with
regard to the fees that it proposes to charge from the candidates,
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taking into account the cost of components, the reasonable surplus
required for growth and development and other factors relevant to
impart professional education as mentioned in Section 9(1) of the
Act of 2007, and that the function of the AFRC is only to find
out, after giving due opportunity of hearing to the institution,
whether the fees proposed by the institution is based on the
factors mentioned in Section 9(1) of the Act of 2007 and did not
amount to profiteering and commercialization of education. The
High Court had further observed that the AFRC, while determining
the fees, only gives final approval to the proposed fees to be
charged, after being satisfied that it was based on the factors
mentioned in Section 9(1), and that there was no profiteering or
commercialization of education. The High Court accordingly
concluded that the provisions of Sections 4(1), 4(8) and 9 of the
Act of 2007, in substance, empowered the AFRC to be only satisfied
that the fee proposed by private professional educational
institutions did not amount to profiteering or commercialization
of education and was based on the factors mentioned in Section
9(1) of the Act of 2007 and held that the Act of 2007, therefore,
did not violate the right of the private professional educational
institution to charge its own fee. Accepting the said
interpretation, this Court observed that the AFRC which is set up
for that purpose is discharging only a regulatory function, as the
fee which a particular educational institution seeks to charge
from its students has to be suggested by the said educational
institution itself and the AFRC is empowered to satisfy itself
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that the fee proposed by the educational institution did not
amount to profiteering or commercialization of education and was
based on the intelligible factors mentioned in Section 9(1) of the
Act of 2007. This Court, therefore, concluded that it was only a
regulatory measure and did not take away the power of the
educational institutions to fix their own fees.
14 . The supplementing opinion of R. Banumathi J noted that, though
Section 9 of the Act of 2007 empowered the AFRC to determine the
fees, the High Court had read down Sections 4(1), 4(8) and 9 of
Act of 2007, by holding that those provisions " in substance
empower the committee to be only satisfied that the fee proposed
by a private professional educational institution did not amount
to profiteering or commercialization of education and was based on
the factors mentioned in Section 9(1) of the Act 2007... ". The
learned Judge accordingly held that the State had the legislative
competence to enact the Act of 2007 and regulation of fixation of
the fees was to protect the right of the students in having access
to higher education without being subjected to exploitation in the
form of profiteering. The learned Judge concurred with the
majority view in upholding the validity of the impugned
legislation and affirmed the decision of the High Court.
15 . It is, therefore, too late in the day for the appellant
society to again seek to challenge the validity of the Act of
2007, as the provisions of this enactment have already been read
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down by this Court to mean that the AFRC would have the power only
to regulate the fee once the same is proposed by the educational
institution itself, keeping in mind the parameters encapsulated in
Section 9(1) thereof.
16 . Therefore, as matters stand, the Act of 2007 has been
interpreted to mean that the AFRC, constituted
thereunder, exercises only the power of ‘regulation’ in respect of
the fees proposed by the institution, conditioned by the
parameters in Section 9(1) of the Act of 2007. In effect, the
liberty given to unaided institutions to propose the fees that
they wish to charge, keeping in mind the factors set out in
Section 9(1) of the Act of 2007, stands protected and it is only
by way of regulating the fees so proposed that the AFRC would
exercise the power of reviewing the proposed fees, after giving
due opportunity of hearing to the educational institution
concerned. The contrary stand taken by the AFRC, as is evident
from its communications to the appellant society, therefore cannot
be countenanced. It is not open to the AFRC to seek to
unilaterally fix the fees to be charged by the appellant society
for the professional courses offered through its educational
institutions. At the same time, it is not open to the appellant
society to claim complete immunity in undertaking this exercise
and seek exemption from any interference by the AFRC. The
appellant society must necessarily submit the fees proposed by it
in respect of the professional courses offered through its
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institutions to the AFRC for the purpose of review and regulation,
as per the provisions of Section 9 of the Act of 2007 and the
principles laid down by this Court in the decisions referred to
hereinabove. Making this position clear, the appeal is disposed of
accordingly.
Parties shall bear their own costs.
………………………………………...J
[DINESH MAHESHWARI]
………………………………………...J
[SANJAY KUMAR]
NEW DELHI;
March 17, 2023.
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